Betaworks acquires Digg for meager $500,000

Digg may be dead. Once the darling of the Internet in its heyday, the social news site made some poor moves and has fallen to the wayside in recent years. Once a distant second, competitor Reddit has far outgrown Digg. Betaworks, an investment firm, announced today that it had acquired Digg’s “core assets.”

Earlier rumors indicated that The Washington Post was interested in hiring Digg’s staff, but was planning to leave Digg.com to flounder in an effort to bolster The Washington Post’s own social reading application, Trove. In May 2012, Social Code, a social advertising agency and a subsidiary of The Washington Post Company announced that it had acquired 15 of Digg’s engineers for $12 million. LinkedIn acquired 15 Digg patents for between $3.75 million and $4 million. The remaining assets, its brand, technology, and 7 million monthly visitors (according to The Wall Street Journal) have been acquired by Betaworks for a meager $500,000, a fraction of the $45 million investment that was pumped into Digg, and the $200 million that Google had flirted years ago before its deal fell apart.

The deal, which closed on Thursday, will see the entire remaining Digg team axed and revert the company back to its start-up culture. “We are turning Digg back into a startup. Low budget, small team, fast cycles,” Betaworks said in a statement.

Digg supposedly had higher bidders comprised of tech companies, publishers and start-ups, but The Wall Street Journal’s sources revealed that “Betaworks had the best plan for reviving its brand.”

What’s left of Digg will be folded into News.me, a social news discovery reader that recommends news pulled from your Facebook and Twitter stream. News.me was launched in April 2011.

“We have spent the last 18 months building News.me as a mobile-first social news experience. The News.me team will take Digg back to its essence: the best place to find, read, and share the stories the internet is talking about. Right now,” Betaworks said.

Edit:We’ve included the purchase price of Digg’g engineers for $12 million and LinkedIn’s acquisition of 15 Digg patents for between $3.75 million and $4 million.

Update: In talking with All Things D, Digg’s CEO, Matt Williams, clarified that with a combination of an equity and cash purchase of Digg, “the overall consideration is considerably larger.” The exact cost of Digg still unknown.